Reed Hastings

The move

1997. Reed Hastings co-founds Netflix as a DVD-by-post subscription. The competition is Blockbuster. 9,000 stores. $5B in revenue. Netflix bets that a flat monthly fee, posted to your door with no late fees, will grow faster than 9,000 shop leases. By 2002 they're public.

2011. Netflix still makes a lot of its money posting DVDs. Hastings splits Netflix in two. A streaming service, and a DVD service later called Qwikster. The market hates it. The stock falls from about $300 to $63 within months. He drops Qwikster, keeps the streaming bet and takes the hit.

2013. House of Cards. Next bet. Netflix won't just license shows. It'll make them. Hollywood thought streaming was a way to show someone else's catalogue. Hastings turned it into the biggest content studio in the world.

260M+ subscribers in 190 countries. Hollywood now runs on the streaming model he built. Blockbuster filed for bankruptcy in 2010.

Why it was risky

Every move ate the business before it. DVD by post killed the rental shop. Streaming killed the DVD. Making shows killed the licensing deals. Every time, the analysts said don't. Customers left. The stock fell. Hastings did it anyway, because the other option was someone else slowly doing it to him.

The numbers

From a DVD-by-post experiment to the biggest streaming and original content business in the world. Three big switches in 25 years, and every one put the old business at risk.

The lesson

Streaming wasn't the scary part. Killing the DVD that was paying for it was. Hastings ran Netflix on one rule. If the next chapter doesn't threaten this one, you're just hoping. R.I.S.K. is for leaders ready to break the model that's working.